Chapter 1 - Principles of Finance

Front

What is the primary goal of the science of finance?

Back

To guide managers' decisions

Front

What does finance involve besides theory?

Back

Art

Front

What is the primary goal of maximizing profit?

Back

Emphasizing accounting profit for a short term

Front

What happens if a company does not spend on research and development?

Back

It will lag behind its competitors.

Front

What is the objective of evaluating investment alternatives?

Back

To obtain profit or cash flow

Front

What is the relationship between risk and return?

Back

Higher returns require higher risk.

Front

What is capital budgeting?

Back

What long-term investments to undertake

Front

What is capital structure?

Back

How to raise money

Front

What is working capital management?

Back

How to manage cash flows

Front

What does the finance area focus on in a firm?

Back

Both short-term and long-term goals